Yet from a consumer brand standpoint, the most interesting sci-fi trend coming out of China is happening in the good old fashioned retail sector.

In most parts of the developed world, we’ve already seen the wave of small retailers being wiped out by bigger, more efficient global retailers using economies of scale and outsourced labour. The next wave is likely to see many of those global retailers get swallowed up or wiped out by the Alibabas, Tencents and Amazons of the world.

Why will this happen in China before anywhere else? It comes down to two things: data and the current retail fragmentation.

Chinese consumers use their smartphones for more of life’s moments than anyone else on the planet, feeding data to those who control them. We only need to look at the value of China’s mobile payments which is 60 times larger than the US. Every time someone pays or transfers money on their mobile, Alibaba and Tencent are gifted a little more insight about them. Almost every time they search, browse, buy, comment, watch, play, share or use a cloud computing service online, Alibaba and Tencent glean some insights.

When consumers are offline, in addition to their payments, their bike sharing, food delivery, taxi trips, even some of the football matches they watch are adding to the vaults of data. That’s before we’ve even considered the enormous insights from the “City Brain” type projects mentioned above. There is not a single company in the West who comes close to tracking consumers daily lives like Alibaba and Tencent, and with China’s lax attitudes to privacy and equally liberal laws it makes that data even more valuable. Cambridge Analytica is a caveman with a club compared to China’s laser-gun wielding tech behemoths.

The second driver is China’s existing bricks & mortar retail market, which is among the most fragmented in the world. Whilst America’s top-100 retailers accounted for over 40% of its retail market last year, China’s top-100 retailers made up just 6.4% of total sales of consumer goods. In a market dominated by regional chains and Mom & Pop stores there are no leaders with true market scale – enter Alibaba and Tencent.

Alibaba may have historically been an e-commerce company, but it has realised that e-commerce will never supplant bricks & mortar retail. People still need immediate convenience, and the experience of social interaction, touching, smelling and feeling which doesn’t quite get there with screens or VR. This has led Alibaba and Tencent to invest in stores such as Hema and 7Fresh.

We’re starting to see the early signs of Alibaba and Tencent’s quest for retail domination in China, both online and offline. Alongside Hema, Alibaba has invested in RT Mart, Suning Fresh and Auchan just in the grocery category. Tencent has JD’s 7Fresh stores, Carrefour, Yonghui and is working closely with Walmart. There are also investments in furniture chains, department stores, auto manufacturing and shopping malls. Alibaba is even creeping into Mom & Pop stores: before Singles’ Day last November, it had installed its cloud system in 600,000 independent retailers – 10% of China’s total. In addition, Alibaba and Tencent/JD’s extensive logistics networks also enable it to reach every corner of China to help create a truly national retailer.

On another, but not entirely unrelated topic, Austcham and China Skinny will be presenting the fascinating findings and conclusions from the work we have done on the 2018 Westpac Australian China Business Sentiment Survey. The survey outlines the challenges and opportunities Australian businesses are facing in China. The study’s launch will coincide with enlightening and interactive events in Sydney on 17 April, Melbourne on 19 April and Shanghai on 25 April. If you’re connected to Australia-China trade in any way, we hope to see you at one of the events. Go to Page 2 to see this week’s China news and highlights.